After 66, 67, business still in Oregon

“The tax increases are an absolute disincentive to grow my company. We will be up to 250 and 300 jobs in three or four years, but those jobs won’t be in Oregon.”

Bruce Hough, president and CEO of Medford-based ComNet Marketing Group, posted that comment at oregontaxresponse.com in response to the passage of Measures 66 and 67, which raised Oregon’s personal income and corporate excise taxes retroactively to 2009.

Now, six months after voters approved the measures, Hough has put his relocation plan into action.

“I had planned to open two new offices in Oregon and I will not do that now,” he said, adding that he will open a new office in Nevada next month. “I bring millions and millions of dollars a year into this economy, and now I’m going to take that to someone else’s economy.”

Hough expects other Oregon companies to follow suit. He said that according to a poll conducted before the January special election, if the measures passed, 85 percent of companies surveyed would be less likely to expand their business and hire new people, more likely to lay people off and more likely to raise their prices.

Of those surveyed, according to Hough, 65 percent said they were more likely to relocate their business if the measures passed.

“Even if only 10 percent of those do it, that’s still a lot of businesses, and there’s no way the state can make up for that loss,” he said.

So far, though, the mass exodus has not materialized, despite personal invitations extended by Chicago Mayor Richard Daley, Idaho Gov. C.L. “Butch” Otter and business recruiters from a slew of other states seeking to capitalize on private-sector discontent in Oregon.

Wally Van Valkenburg, managing partner of Stoel Rives’ Portland office and chairman of Oregon’s Business Development Commission, said neither the commission nor the state’s economic development department have seen any losses triggered specifically by the tax increases.

“These sorts of decisions aren’t made quickly, and I would be surprised if too many businesses decided to relocate,” he said.

Mike Salsgiver, executive director of Associated General Contractors of America’s Oregon-Columbia chapter, said AGC also has yet to hear from members or former members who are leaving or closing because of the measures.

“I’ve heard a lot of grumbling about it, but no one has said, ‘We’re wrapping it up because of what the state did,’ ” he said.

However, Salsgiver noted, a diverse group of business professionals from across the state has been meeting at 9 a.m. each Wednesday, usually in the boardroom at Associated Oregon Industries’ Salem office, to share concerns and strategize.

The informal coalition has been dubbed the Oregon Committee, or the Wednesday Group. Its gatherings typically draw 30 to 40 people representing a range of sectors, such as construction and banking.

“It’s actually an impressive collection of businesspeople,” Salsgiver said. “In the 30 years I’ve been doing this, I’ve never seen this many individual businesses and business associations meet this consistently. And it includes groups you wouldn’t normally see in the same room.

“I think it shows that we all understand that if we don’t do this, it’s only going to get worse from a policy perspective,” he added. “So from that standpoint, we’re doing what we should be doing and that is forming our agenda and speaking with one voice.”

The Alliance of Oregon Business Associations is furthering that effort through a website launched in April. Oregontaxresponse.com was established to gather stories from Oregon companies and their employees and to quantify the impacts of Measures 66 and 67.

The alliance, according to spokesperson J.L. Wilson, hopes to let policymakers and legislators know how specific taxes impact the state’s economy. The group plans to vet the tax impacts for accuracy.

As the alliance sets about its task, Oregon’s Business Development Commission will continue to promote the state’s positive attributes as it recruits businesses, Van Valkenburg said.

However, the commission recognizes that Oregon is hampered because it has only two – personal income and corporate excise taxes – of the three revenue streams available to most states.

“I think the issue with the tax measures isn’t whether we have high taxes but whether we have tax balance. Oregon’s tax system is out of balance, which puts us at a competitive disadvantage,” Van Valkenburg said.

In addition, there is work to be done to bridge the divide caused by Measures 66 and 67, he said.

“We need a good relationship between the public and private sectors, and that has been jeopardized by the measures, so hopefully we can repair those public-private partnerships,” Van Valkenburg said.

Pat McCormick, a Portland public relations professional and spokesman for Oregonians Against Job-Killing Taxes leading up to the special election, said he and other business leaders are looking for other ways companies can reduce expenses to compensate for the increased tax burden.

McCormick said he was gratified to hear Gov. Ted Kulongoski acknowledge the structural problems that threaten Oregon’s economy when he spoke to the City Club of Portland recently.

“He raised questions the business community raised during Measures 66 and 67 about the sustainability of certain benefits, particularly health care and retirement benefits,” he said. “The business community is grateful to hear from a state leader, especially one as closely tied to organized labor as he has been, that we need to address those costly benefits.

“If there is a disappointment it’s that he’s raising these questions during the last six months of his administration rather than the first six months. But it’s good to have it on the table that these costs are not sustainable,” McCormick added.